A mortgage broking industry association, in response to a Productivity Commission report, has accused financial advisers of being responsible for a “majority of issues” caused to clients between the two industries.
In its draft report into competition in the Australian financial system, the Productivity Commission (PC) said allowing advisers to advise on some credit facilities would have numerous benefits for consumers, adding that mortgage brokers are “held to a relatively low standard”.
Speaking to ifa sister title The Adviser, Finance Brokers’ Association of Australia executive director Peter White challenged the PC’s comments, arguing that historically the financial advice industry has been more problematic than mortgage broking.
“There have been many issues reported in that space [financial advice] already though, so if you want to line up the two styles of professions [advisers and brokers] have a look at the issues in the financial planning space over the last 15 years and compare them to the broking space and the lending area,” he said.
“I know where the majority of issues sit. If that is what the [PC] is suggesting ... and I don’t know if they are or not, but if that is what the PC is suggesting, then that is just ludicrous.”
However, rival association the Mortgage and Finance Association of Australia (MFAA) said the report “failed to understand the reasons why consumers engage brokers to act on their behalf” and ignored the value brokers have brought to Australia.
“Mortgage brokers offer customers the choice of a wide range of lenders and products. They work through ever-increasing complexity to place their customer at the centre of the process and match products to their specific needs,” said MFAA chief executive Mike Felton.
“Brokers offer convenience for customers by removing the administrative burden of obtaining a mortgage, whilst providing personalised advice and service over the life of the loan.”
Mr Felton added that an EY survey from 2015, conducted on behalf of the MFAA, found 92 per cent of consumers were satisfied with their broker’s performance.
“I am extremely proud of the contribution brokers make to competition for consumers, and to the Australian economy overall,” he said.
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